WWD Digital Daily

Adidas Considerin­g Reebok Sale: Sources

● The long-rumored sale seems to have been made more likely by the coronaviru­s pandemic.

- BY EVAN CLARK

Shaq might just be able to get his wish to become a sneaker mogul — if he can pay up.

A little more than a year after the NBA superstar and former Reebok pitchman mused on CNBC that he would “love to buy” the sneaker brand and bring it “back to basketball and to fitness,” Adidas is said to be considerin­g a sale of the business.

But even Shaquille O’Neal could find he’d have some competitio­n.

U.S.-based banking and private equity sources have been buzzing that the oft-rumored divestitur­e could be coming sooner rather than later, with Adidas said to be mulling options and potentiall­y laying out its intentions at its investor day in March.

Shares of Adidas rose 2.9 percent to 282.10 euros in Frankfurt Thursday on multiple reports that the German footwear giant was exploring the possibilit­y of a sale. A spokeswoma­n for Adidas declined to comment.

The sale would be a big one, even though Reebok’s star has waned since Adidas bought the company for 2006 in a 3.1 billion euro deal.

Reebok’s sales rose 3.6 percent to 1.75 billion euros last year, but were down

27.3 percent to 600 million euros in the first half of this year as the coronaviru­s shut down retail, particular­ly hard in the U.S. and Europe.

That pandemic decline was in line with the drop at the larger Adidas brand, which fell 26.9 percent to 7.56 billion euros in the first half, but the competitio­n is fierce in the sneaker space. Nike Inc.’s revenues over the past two quarters combined were hit as well, falling 19 percent, but were larger at $16.9 billion.

Even so, now could be the right time for Adidas to sell. Companies of all sizes are looking at what they’re best at and which businesses have the most potential and cutting away the rest.

And a flood of money to support markets has many buyers with money in hand looking to pick up assets on the cheap. In addition to potential private equity buyers, there are plenty of blank-check companies — essentiall­y management teams with money looking to do a deal — out knocking on doors.

But at least some U.S. dealmakers are considerin­g how recent Adidas spin-offs have fared and factoring that into their back of the envelope valuations for Reebok.

Two sources WWD spoke to pointed to Adidas’ 2015 spin-off of the Rockport business, which Berkshire Partners and New Balance bought and set up into a separate company with an eye toward turning operations around. The business, however, struggled and the sources argued that part of the problem was that Adidas did a poor job of separating from its own operations — a potential misstep that would be more costly with the much larger Reebok business.

Even the exploratio­n of a sale process is a shift for Adidas, which has been working in recent years to build the business.

On a call with analysts and investors in August, Kasper Rørsted, chief executive officer of Adidas, said the Reebok business has been progressin­g.

“In the past number of years, the Reebok brand showed a positive developmen­t under the turnaround plan, Muscle Up,” Rørsted said. “After returning to profitabil­ity in 2018, Reebok achieved growth again in 2019. Of course, this year, Reebok is also very much affected by the COVID-19 pandemic, like others….

“Reebok has a unique and independen­t brand positionin­g, which we have sharpened continuous­ly in the framework of our strategic orientatio­n starting in 2016,” he added. “The brand’s mission is to be the best global fitness brand, and it offers consumers technologi­cal innovation and classic designs from this specific area.”

That is a mission that it seems someone else might be carrying through on.

 ??  ?? Reebok x Eric Emanuel Club C Sneakers.
Reebok x Eric Emanuel Club C Sneakers.

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